Art Law Blog : New York Art Law Lawyer & Attorney : Fox Rothschild Law Firm : Theft, Intellectual Property, Institutional Negotiation : Manhattan, New York City

Judge Berman in the United States District Court, S.D.N.Y., recently held that there was no federal question jurisdiction in a matter where Sotheby's sued Modern Art Services Ltd. for negligent mishandling of a statue.  The Court also determined that Sotheby's claim was not preempted by the Carmack Amendment.

The Court noted that absent evidence Congress intended federal courts to have exclusive subject matter jurisdiction over the preemption defense to state law claims against air carriers, it must assume that "a state court, subject to review by a writ of certiorari can resolve such a defense as ably as could a federal district court."

The decision is reported as Sotheby's Inc. v. Modern Art Services, Ltd., 10 CIV 9032, April 21, 2011.

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According to this Bloomberg article,a triptych of self portraits by Francis Bacon may raise at least $20 million at auction next month as demand grows for the U.K.’s most expensive artist.

The article also notes that: " The triptych of head-and-shoulder studies, one of 10 self portraits Bacon executed in the 1970s, has been owned for 35 years by the seller, who has been guaranteed a minimum price. The canvas of the nude, which doesn’t have a price guarantee, was one of a group of paintings by the artist discovered in a storeroom in London’s Chelsea in the 1990s, "

This raises an interesting issue: why does one of the works have a guarantee while the other work does not?  There can be many reasons, including competition between auction houses, auction houses believeing in a work's potential for auction, or other arrangements between the auction house and the consignor.

(This entry was created with the assistance of Nicole Dornbusch.)

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Guarantees are a crucial aspect of auction house sales and transactions.

Auction houses offer these arrangements to buyers to secure important lots, especially if works seem to be safe bets that will significantly boost sales. Guarantees present interesting ethical issues because the auction house has a responsibility in every sale to both buyer and seller. 

The guarantee gives the auction house an additional stake in selling a work of art, which in turn could encourage bias towards the seller.  In other words, the auction house has significant risk in not selling the work as they have a contractual obligation to the seller.  This may mean that the auction house will put forther greater effort into marketing and selling the work that bears a guarantee.

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This weekend's Wall Street Journal has an interesting article about the state of the art market and the upcoming Impressionist, modern and contemporary art auctions. 

The article quotes Michael Plummer, a principal of Artvest, as stating: "The speed of the art market's recovery is astonishing, but it's a differently revived market. The lesson of the crash was to do your homework. Collectors feel wiser for the experience." 

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